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Biden-era Transportation Secretary Pete Buttigieg says that the Biden administration could’ve done more to drive growth in the adoption of autonomous vehicles in the U.S.
“We’re at the point where at least some of these technologies, right now, already, are safer than human beings and that’s only gonna increase and improve,” Buttigieg said during an appearance on the All In Podcast on Thursday, adding that the technology had the potential to “save a huge number of lives.”
Buttigieg also outlined the differences in safety regulations between aviation and road safety, noting that hundreds of people lose their lives on the road daily in car crashes driven by human drivers. “It’s enough to fill a 737 every day,” Buttigieg said. “Are there things we could, or should have done, to accelerate AV adoption? I think the answer is yes,” Buttigieg said.
Sharing his insight into the Department of Government Efficiency (DOGE), Buttigieg said that it made “tons of sense” in theory. “I would love, in theory, a Department of Government Efficiency that was actually about government efficiency,” Buttigieg said.
He added that an ideal DOGE could do a lot of good, but “the DOGE we got, sent an email to every air traffic controller in the country, during an air traffic controller shortage, and suggested they quit being an air traffic controller, and get something “more productive” to do in the private sector,” Buttigieg said, criticizing the Elon Musk-led department that was tasked with cutting down excess federal spending.
Recently, Uber Technologies Inc. (NYSE:UBER) CEO Dara Khosrowshahi predicted that most vehicles would be autonomous in 20+ years, comparing driving to “horseback riding” in the future. He also added that human drivers would become less safe than robots as autonomous driving technologies evolve with time.
Khosrowshahi’s comments come amid a partnership with chipmaker Nvidia Corp (NASDAQ:NVDA), which would target deploying over 100,000 autonomous vehicles by 2027 on Uber’s platform. The vehicles would be powered by Nvidia’s autonomous driving stack, which includes both hardware and software capabilities.
Meanwhile, Tesla Inc. (NASDAQ:TSLA) is slated to begin production of the Cybercab as the EV giant posted multiple job listings on its official website detailing open positions at the company’s Gigafactory in Texas for the Cybercab’s production.
The Cybercab could also feature a steering wheel and pedals like traditional vehicles, something which wasn’t initially in the plans for Tesla, following comments by Board Chair Robyn Denholm that the company could add them to the vehicle to comply with safety regulations.
Elsewhere, Alphabet Inc.‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) autonomous vehicle arm Waymo CEO Tekedra Mawakana called for transparency in the autonomous vehicle sector, noting that companies that weren’t transparent were not doing enough to make roads safer.
Photo courtesy: Rich Koele on Shutterstock.com
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With San Francisco facing record high commercial vacancies, one mayoral candidate has a plan to reshape the city’s business district and surrounding areas.
Democrat Mark Farrell, former interim mayor, is proposing a 20-year vision to revitalize San Francisco’s downtown in a bid to help the city bounce back from challenges exacerbated by the pandemic. His plan includes a new park at Embarcadero Plaza and mixed-use buildings that provide more housing options.
He’s also proposing tax incentives for businesses that relocate to the area, and for those that mandate workers return to the office four days a week. The goal is to incentivize industries beyond technology.
“As I’ve traveled around the world and in our own country over the past few years for work, other downtowns and other cities have recovered from Covid,” Farrell told CNBC in an interview. “Unfortunately, our city now ranks dead last in economic recovery post-Covid. And that, to me, is an embarrassment and it needs to change.”
Commercial real estate vacancies in San Francisco hit a fresh high of 34.5% in the second quarter, according to a report last week from Cushman & Wakefield, up from 5% before the pandemic. Manhattan’s vacancy rate for the quarter was 23.6%. Farrell’s goal is to cut San Francisco’s vacancy rate in half by the end of a first term.
A key piece of Farrell’s plan involves getting workers back into the city. Many of San Francisco’s top employers, including Salesforce, Uber and Visa, have embraced hybrid work, with staffers coming in, at best, three days a week. On top of that, the tech industry has been battered by layoffs over the past two years, removing thousands of people from payrolls.
Under Farrell’s proposal, business that relocate downtown would receive a gross receipts tax incentive, as would companies that compel employees to come to the office four days a week. Such mandates have seen pushback in some cities, most recently in Philadelphia, where unionized city workers lost a bid to extend further an in-person work deadline.
“Right now, if you come downtown, the issue is, is the lack of people; it’s a shell of what it used to be,” Farrell said. The incentives are designed to make sure “employees come back to work multiple days a week in the office to create that vibrancy that will really bring the future of downtown forward,” he said.
Public safety is a major concern, as certain parts of downtown San Francisco are rife with drug use and homeless encampments. Farrell is calling for an increase in police staffing, adding that safety and street conditions impact every neighborhood, beyond San Francisco’s downtown core.
On Tuesday, Elon Musk said he’s moving the headquarters for X, formerly known as Twitter, to Austin, Texas, from San Francisco. X had already been looking to sublease most of its building in the city, and Musk posted on X on Tuesday, “Have had enough of dodging gangs of violent drug addicts just to get in and out of the building.”
Conferences and tourism have also been slow to return to the city since the shutdowns that began in early 2020. The park at Embarcadero Plaza would be part of a plan to bring some of that back, Farrell said. He envisions a clean and open park outside of the Ferry Building to draw in workers, residents and tourists. He likened it to Mission Dolores Park, a San Francisco landmark.
An image commissioned by Mayoral Candidate Mark Farrell’s campaign to show its plans for a new “world class” park on the Embarcadero in the future.
Courtesy: Farrell for Mayor Commissioned from Gensler
For housing, Farrell’s plan includes “aggressive tax-increment financing” and local incentives to drive faster housing development as well as conversion of commercial buildings to residential. Farrell is also seeking to increase height limits in neighborhoods including the Financial District, SoMA and Mission Bay to create “tens of thousands” of new units and residents, and encourage more housing in places like Union Square, which recently lost major tenants including Macy’s and Nordstrom.
Farrell said the idea is akin to New York’s Hudson Yards, which opened before the pandemic. That project was criticized for its hefty price tag, but has since turned into a success story with lower office vacancies than other Manhattan neighborhoods. Farrell said his proposal promises to be a revenue generator for the city but that it needs anchor projects.
“Right now the problem is downtown,” Farrell said. “We don’t have people working here. And it is a ghost town. And what that translates into is a loss of sales tax revenue, property tax revenue that is decreasing in major ways when buildings are selling for 10 or 20 cents on the dollar. At the end of the day, those resulting commercial property taxes are putting a massive hole in our budget here in San Francisco.”
Farrell is just one of a number of well-known local candidates, including sitting Mayor London Breed, philanthropist Daniel Lurie and Board of Supervisors President Aaron Peskin. According to the city government’s website, 13 people have qualified for the November mayoral election.
— CNBC’s Ari Levy and Jordan Novet contributed to this report.
Artificial intelligence has been a big boon for San Francisco real estate. But not enough of one to make up for the broader struggle across the market.
The vacancy rate for San Francisco office space reached a fresh record of 34.5% in the second quarter, according to a report Monday from commercial real estate firm Cushman & Wakefield. That’s up from 33.9% in the first quarter, 28.1% in the same period a year ago and 5% before the pandemic.
Meanwhile, the average asking rent dropped to $68.27 per square foot in the quarter, the lowest since late 2015, down from $72.90 a year earlier and a peak of $84.70 in 2020.
San Francisco is reeling from the twin challenges of bringing people back to the office after the Covid pandemic and a slowdown in the tech market that’s led to mass job cuts across the industry. Tech companies have laid off more than 530,000 employees since the start of 2022, according to the website Layoffs.fyi, with major downsizing at Alphabet, Meta, Amazon, Tesla, Microsoft and Salesforce.
Softening the blow of late has been the soaring popularity of generative AI and the decision by fast-growing startups to open large offices in San Francisco.
OpenAI, the market leader with a private valuation that’s topped $80 billion, announced in October that it was leasing about 500,000 square feet of space in the Mission Bay neighborhood, the biggest office lease in the city since 2018. Robert Sammons, senior research director at Cushman & Wakefield, said OpenAI is continuing to look for more space in the city.
Also last year, OpenAI rival Anthropic subleased 230,000 square feet at Slack’s headquarters. And in May of this year, Scale AI signed a lease for a reported 170,000 to 180,000 square feet of space in Airbnb’s office building.
“San Francisco is certainly the center of AI, but AI is not going to save the San Francisco commercial real estate market,” Sammons said. “It will help.”
While richly capitalized AI startups are signing large leases for new space, the bigger trend is that tech companies, law offices and consulting firms are looking to reduce their footprint when existing leases come up, Sammons said, reflecting the widespread move to hybrid work.
In many cases, companies are looking to relocate to higher quality space in more desirable parts of the city, because prices have come down and employers need to be near restaurants and shops to get staffers to come back, Sammons added.
“The best quality trophy space continues to perform well, because tenants want to be in the best locations with the best amenities around them,” Sammons said.
Some of the city’s top employers, including Salesforce, Uber, Visa and Wells Fargo, have brought employees back to offices for part of the week. That’s helped in the financial district, where the vacancy rate is still 34.2% on the north side and 32.7% on the south side at the end of the quarter. In SoMa, which historically was a popular area for venture-backed startups, the vacancy rate is almost 50%.
SoMa is further away from mass transit options and has also been hurt by large retail departures. Vacant office space across San Francisco for the quarter totaled 29.6 million square feet, Cushman & Wakefield said.
The firm said in its report that there are positive signs in the market, with absorption poised to improve in the second half and office job numbers stabilizing following a steep drop-off. But Sammons said it looks like there’s more room for rents to fall and for vacancies to rise. Uncertainty surrounding the upcoming presidential election may be a factor delaying new leases, he said.
“Sometimes tenants postpone making decisions when there are major elections,” he said.
When Apple announced the iPhone in 2007, Steve Jobs called it a “revolutionary product” in a handset category that he said needed to be reinvented.
Now, nearly two decades and 42 models later, the iPhone is one of the world’s most popular phones. Apple has sold over 2.3 billion units of the iPhone and has over 1.5 billion active users, according to research from Demand Sage.
The original iPhone was released in June 2007 and exclusively sold with AT&T for $499.
The late Apple CEO Steve Jobs unveiling the first iPhone in 2007.
David Paul Morris | Getty Images News | Getty Images
“Investors were optimistic about the impact that it could have with Apple,” said Deepwater Asset’s Gene Munster. “The initial data that came out from AT&T was a disappointment from that first few days of sales. I remember talking to investors after that first weekend, and the general sense was that this product, in one investor’s words, was dead on arrival.”
Apple sold 1.4 million iPhones in 2007 with 80% of the sales coming in Q4. In the same year Nokia, the maker of the iconic Nokia 3310, sold 7.4 million mobile phones in Q4 alone.
“Nokia was seen as unstoppable, unbeatable,” said CNBC technology reporter Kif Leswing.
JAPAN – FEBRUARY 15: The Nokia 3310 Launched on the 1st September 2000
Science & Society Picture Library | SSPL| Getty Images
“The investing community largely took this as something that is going to be a much more difficult market for Apple to really crack,” said Munster.
Things started to shift for Apple in 2008 when it launched the App Store. This helped spur a new wave of modern tech companies like Uber and put Apple ahead of its competitors.
“The App Store allowed your phone to become a lot more,” said Munster. “That was the piece, that insight, other phone manufacturers didn’t see that coming.”
Apple saw increased iPhone unit sales in the years following the App Store. The company hit a major milestone — more than 50 million units sold — in 2011, with the help of the iPhone 4s. The company sold 72 million units that year. By 2015, Apple was selling over 200 million iPhone units yearly.
“I don’t think there’s any question the iPhone set the standard that really almost all phones have followed since then,” said Computer History Museum’s Marc Weber. “The App Store was a huge thing and Android basically followed that model with the Play Store.”
Apple recently surpassed Samsung, one of its biggest competitors, as the world’s smartphone leader for the first time. According to data from the International Data Corp., Apple holds just over 20% of the global market share, a spot that Samsung held since 2010.
“There was a period from 2008 to 2015 where Apple needed to worry about what Samsung was going to do with Android. Their market share was actually declining globally,” said Munster. “But, what Apple has been the master at is building the ecosystem. I can’t imagine a scenario where Samsung can build a suite of products that is going to disrupt the Apple ecosystem.”
“AI is going to be critical to humanity, and it’s going to be a critical feature inside of iPhones,” said Munster. “Apple uses AI to make the products work better with organizing photos, with helping organize emails, and potentially doing things around text organization. But for the most part is that the iPhone doesn’t capture, doesn’t really capture the full opportunity. Far from it when it comes to AI.”
Two centuries ago one of the first economists, David Ricardo coined the still famous investment adage “Let your profits run (on).” Makes sense. All else equal, one would prefer to own or buy stocks in uptrends, and there have been some exceptional uptrends this year. Thirty-six Russell 1000 stocks are up more than 100%. What would Ricardo have done with his winners if he had options to trade? Here’s my take. Let ’em ride: Several of 2023’s best-performing stocks were grossly undervalued at the beginning of the year. In some cases for reasons that were easily identifiable both then and now. Arguably the best example is Meta . At its November 2022 low Meta traded down to $90 a share, less than 7 times the $13.71 in adjusted eps the company earned in FY2021. Although revenue growth paused in 2022 the company had a very strong balance sheet and had historically been a free cash flow generating powerhouse. The problem was that Mark Zuckerberg was losing billions, throwing money at his vision for the metaverse, and investors were concerned it had become an obsession taking precedence over the best course for the business. Many investors were quite vocal about their displeasure, but voicing their concerns was all they could do because Zuckerberg controls more than 50% of the voting rights through a special class of shares. So while investors recognized the company could deliver massive earnings and free cash flow, they were afraid Zuckerberg had gone off the reservation. Eventually, though he did elect to moderate his spending on his ambitious visions. The company has returned to record profitability and free cash flow generation and the stock has responded in kind, up 140% since the November 2022 low. While certainly not as cheap as it was a year ago, Meta remains cheap at not because it is trading at 20 times FY2024 EPS estimates of $18 a share, but because that represents 20% annual EPS growth. The stock sports topline growth, substantial margins, a strong balance sheet, substantial free cash flow, and a moat around its business. META’s biggest threat is itself, and as long as management doesn’t go back down the rabbit hole, it is a poster child for growth at a reasonable price (GARP). Other big winners for 2023 that remain well positioned for 2024 as long-term rates have dropped while unemployment has remained low include Vertiv Holding , Builders Firstsource , Topbuild Corp , and PulteHome . Nvidia and Uber are too, even despite the huge runs they’ve had at reasonable valuation given their respective growth rates, but bear in mind that some investors may have deferred taking gains in these and other large winners for tax reasons. Due to this and their high betas, any market choppiness in the market generally will affect these names more severely. It’s time to hedge some of those gains (or take profits): The second best-performing stock in the Russell 1000 for 2023 is Coinbase (COIN) . As of year-end 2022, COIN was down more than 90% from its November 2021 peak. Investors shunned the stock as cryptocurrencies had plummeted. Bitcoin, the most well-known cryptocurrency, had fallen more than 76% from peak to trough, and it would be reasonable to assume that if cryptocurrencies continued to perform badly, speculators would trade them less often which would hurt the business of a crypto exchange. It did. Revenues fell nearly 60% year-over-year between FY2021 and FY2022. The company, which had made $21 in adjusted EPS in 2021, swung to a $6.63 a share loss. Unsurprisingly, as cryptocurrencies rebounded in 2023, so did COIN. What’s surprising though is the degree to which it rebounded. Where bitcoin rose > 150%, COIN is up over 400%. Some businesses are indeed highly leveraged to prices for other goods or assets. Gold miners’ prices are levered to the price of gold, oil companies to the price of oil, chip makers like MU to the price of NAND and DRAM and cryptocurrency miners and exchanges to the prices of the cryptocurrency. The issue I have with Coinbase is that despite the sharp increase in cryptocurrency prices, revenues and earnings have not rebounded in quite the same way. FY2024 revenue expectations of 2.9 billion are more than 60% below the company’s zenith in 2021 of $7.8 billion. The company is expected to report FY2023 losses of 89 cents share. Street estimates are not forecasting a return to profitability until 2027. Why not? How is it that cryptocurrency prices can rebound so sharply and the company cannot return to the same level of profitability they saw in 2020 when the price of bitcoin for example was far lower than it is today? If I believed that Coinbase could reliably generate $4.7 billion in net income as it did in 2021 this thing would be ludicrously cheap, but it feels as if the landscape is shifting beneath the company’s feet. Other companies I place in this category include Roku and SoFi . The single best-performing stock in the Russell 1000 for 2023 is Affirm , up nearly 420% year-to-date. Affirm Holdings is a popular buy now, pay later fintech company. How popular? It’s growing topline at greater than 20%. Its popularity is understandable. In some cases, it offers purchases at zero interest, considerably more attractive than using a high-interest credit card. Additionally, these loans aren’t currently reported to TransUnion or Equifax, so the impact of taking the loan on the borrower’s credit score may be reduced, and in any case, borrowers may wish to preserve available credit lines for other uses. Likely, the company’s partnerships with big online outlets such as Amazon and Walmart are going to show substantial gains during this holiday shopping season. The market opportunity is also substantial relative to the company’s size. At $15 billion in market capitalization, Affirm is still tiny. To put things in perspective, the combined market capitalization of Visa and Mastercard is nearly $1 trillion. Paypal is nearly $70 billion. The problem here is that the idea of buy-now-pay-later isn’t proprietary. Affirm is likely to face competition from other payment players. Charge-offs remain low, but we know that consumer credit balances have been rising steadily and are now at all-time highs. Auto loan delinquencies have also been rising. If the other large credit agencies TransUnion or Equifax eventually join Experian and begin tracking these loans, that would eliminate a perceived benefit by consumers. Ultimately though it comes down to a question of whether I would prefer to own money-losing Affirm based on their topline growth, or profitable Paypal for 1/10th the multiple betting they’ll catch on to the portions of Affirm’s business that are growing. If you own, but don’t want to sell, consider purchasing the March $45/$35 put spread as a particle hedge, as illustrated below. The answer is simple, I’d much rather own PayPal (or the major credit card companies). Other names I place in this category include Palantir Technologies . Here too is a company that is growing, but it’s unclear whether the growth targets may be a bit ambitious. Palantir relies heavily on government contracts, greater than 56% by revenue. Government business can be great, but it does introduce concentration risk as that segment of their revenue share indicates. One final thing: hedge when you can, not when you have to. As I write this the VIX Index closed at 12.45, only narrowly higher than the 12.07 low for the year on December 12th while the S & P 500 is just slightly below its record high set on January 3, 2022. DISCLOSURES: THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Shares of Uber Technologies Inc. and the ride-hailing giant’s smaller rival, Lyft Inc., have sprinted higher this year. But analysts on Friday suggested there might not be much left in the tank for either stock heading into 2024.
Nomura analysts Anindya Das and Masataka Kunugimoto on Friday downgraded Uber UBER, -2.49%
to a neutral rating from buy, arguing that most of the things that could drive the stock higher are already baked into the price. They also downgraded Lyft LYFT, -3.54%
to their equivalent of a sell rating from buy, saying the company failed to fully capitalize on the travel industry’s post-pandemic recovery.
Shares of Uber, which closed out the year up 142%, were down 2.5% on Friday. Lyft’s stock gave up 3.4% and finished 2023 up 34.8%.
Uber, the analysts said, had managed to grow this year while occasionally turning a profit, and consolidated its grip on the ride-sharing markets in the U.S. and Canada. Meanwhile, Lyft, they said, had stumbled in its efforts to take advantage of the travel rebound after pandemic restrictions eased, cutting more staff this year after doing the same in 2022.
After years of losing money, they said Uber’s stronger financials this year allowed it to refinance its debt at a lower interest rate and extend the terms of that debt. They noted the company recently joined the S&P 500 Index SPX
and that the market is expecting more stock buybacks from the company, as well as interest-rate cuts by the Federal Reserve next year.
“Thus, most of the milestones and catalysts that we were anticipating to boost Uber’s stock value have been largely met,” they said.
They added: “At this time, we think most of the catalysts for the stock are already priced in, and Uber is fairly valued at the current price. We therefore downgrade it to Neutral from Buy.”
Lyft has tried to cut its prices to compete with Uber, and has held off on expanding into areas like food delivery. But as travel demand settles, the analysts suggested, the advantages would still flow to its archrival.
“We expect 2024 to be more of a ‘normal’ year, in terms of people’s propensity to travel,” the analysts said. “Once the current rebound in travel subsides, we think Lyft’s subscale market positioning, and lack of cross-selling opportunities (unlike Uber), could constrain topline growth for the company.”
“Offsetting a more moderate pace of ridership growth by raising prices would be challenging for Lyft,” they said, “as we think it would be bound by the actions of its larger and more profitable peer, Uber.”
The Nasdaq MarketSite in the Times Square neighborhood of New York, on Tuesday, May 31, 2022.
Michael Nagle | Bloomberg | Getty Images
Tech stocks rebounded from a disastrous 2022 and lifted the Nasdaq to one of its strongest years in the past two decades.
After last year’s 33% plunge, the tech-heavy Nasdaq finished 2023 up 43%, its best year since 2020, which was narrowly higher. The gain was also just shy of the index’s performance in 2009. Those are the only two years with bigger gains dating back to 2003, when stocks were coming out of the dot-com crash.
The Nasdaq is now just 6.5% below its record high it reached in November 2021.
Across the industry, the big story this year was a return to risk, driven by the Federal Reserve halting its interest rate hikes and a more stable outlook on inflation. Companies also benefited from the cost-cutting measures they put in place starting late last year to focus on efficiency and bolstering profit margins.
“Once you have a Fed that’s backing off, no mas, in terms of rate hikes, you can get back to the business of pricing companies properly — how much money do they make, what kind of multiple do you put on it,” Kevin Simpson, founder of Capital Wealth Planning, told CNBC’s “Halftime Report” on Tuesday. “It can continue into 2024.”
While the tech industry got a big boost from the macro environment and the prospect of lower borrowing costs, the emergence of generative artificial intelligence drove excitement in the sector and pushed companies to invest in what’s viewed as the next big thing.
Nvidia was the big winner in the AI rush. The chipmaker’s stock price soared 239% in 2023, as large cloud vendors and heavily funded startups snapped up the company’s graphics processing units (GPUs), which are needed to train and run advanced AI models. In the first three quarters of 2023, Nvidia generated $17.5 billion in net income, up more than sixfold from the prior year. Revenue in the latest quarter tripled.
Jensen Huang, Nvidia’s CEO, said in March that AI’s “iPhone moment” has begun.
“Startups are racing to build disruptive products and business models, while incumbents are looking to respond,” Huang said at Nvidia’s developers conference. “Generative AI has triggered a sense of urgency in enterprises worldwide to develop AI strategies.”
Consumers got to know about generative AI thanks to OpenAI’s ChatGPT, which the Microsoft-backed company released in late 2022. The chatbot allowed users to type in a few words of text and start a conversation that could produce sophisticated responses in an instant.
Developers started using generative AI to create tools for booking travel, creating marketing materials, enhancing customer service and even coding software. Microsoft, Google, Meta and Amazon touted their hefty investments in generative AI as they embedded the tech across product suites.
Amazon CEO Andy Jassy said on his company’s earnings call in October that generative AI will likely produce tens of billions of dollars in revenue for Amazon Web Services in the next few years, adding that Amazon is using the models to forecast inventory, establish transportation routes for drivers, help third-party sellers create product pages and help advertisers generate images.
“We have been surprised at the pace of growth in generative AI,” Jassy said. “Our generative AI business is growing very, very quickly. Almost by any measure it’s a pretty significant business for us already. And yet I would also say that companies are still in the relatively early stages.”
Amazon shares climbed 81% in 2023, their best year since 2015.
Microsoft investors enjoyed a rally this year unlike anything they’d seen since 2009, with shares of the software company climbing 58%.
In addition to its investment in OpenAI, Microsoft integrated the technology into products like Bing, Office and Windows. Copilot became the brand for its broad generative AI service, and CEO Satya Nadella described Microsoft last month as “the Copilot company.”
“Microsoft’s partnership with OpenAI and subsequent product innovation through 2023 has resulted in a market dynamic shift,” Michael Turrin, a Wells Fargo analyst who recommends buying the stock, wrote in a Dec. 20 note to clients. “Many now view MSFT as the outright leader in the early AI wars (even ahead of market share leader AWS).”
Meanwhile, Microsoft has been cranking out profits at a historic rate. In its latest earnings report, Microsoft said its gross margin exceeded 71% for the first time since 2013, when Steve Ballmer ran the company. Microsoft has found ways to more efficiently run its data centers and has lowered reliance on hardware, resulting in higher margins for the segment containing Windows, Xbox and search.
Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. Altman delivered the keynote address at the first ever Open AI DevDay conference.
Justin Sullivan | Getty Images
After Nvidia, the biggest stock pop among mega-cap tech companies was in shares of Meta, which jumped almost 200%. Nvidia and Meta were by far the two top performers in the S&P 500.
Meta’s rally was sparked in February, when CEO Mark Zuckerberg, who founded the company in 2004, said 2023 would be the company’s “year of efficiency” after the stock plummeted 64% in 2022 due largely to three straight quarters of declining revenue.
The company cut more than 20,000 jobs, proving to Wall Street it was serious about streamlining its expenses. Then growth returned as Facebook picked up market share in digital advertising. For the third quarter, Meta recorded expansion of 23%, its sharpest increase in two years.
Like Meta, Uber wasn’t around during the dot-com crash. The ride-hailing company was founded in 2009, during the depths of the financial crisis, and became a tech darling in the ensuing years, when investors favored innovation and growth over profit.
Uber went public in 2019, but for a long time battled the notion that it could never be profitable because so much of its revenue went to paying drivers. But the economic model finally began to work late last year, for both its rideshare and food delivery businesses.
That all allowed Uber to achieve a major investor milestone earlier this month, when the stock was added to the S&P 500. Members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total, according to S&P’s rules. Uber reported net income of $221 million on $9.29 billion in revenue for its third quarter, and in the past four quarters altogether, it generated more than $1 billion in profit.
Uber shares climbed to a record this week and jumped 149% for the year. The stock, which is listed on the New York Stock Exchange, finished the year as the sixth-biggest gainer in the S&P 500.
Despite the tech rally in 2023, there was a dearth of new opportunities for public investors during the year. After a dismal 2022 for tech IPOs, very few names came to market in 2023. The three most notable IPOs — Instacart, Arm and Klaviyo — all took place during a one-week stretch in September.
For most late-stage companies in the IPO pipeline, more work needs to be done. The public market remains unwelcoming for cash-burning companies that have yet to show they can be sustainably profitable, which is a problem for the many startups that raised mountains of cash during the zero-interest days of 2020 and 2021.
Even for profitable software and internet companies, multiples have contracted, meaning the valuation startups achieved in the private market will require many of them to take a haircut when going public.
Byron Lichtenstein, a managing director at venture firm Insight Partners, called 2023 “the great reset.” He said the companies best positioned for IPOs are unlikely to debut until the back half of 2024 at the earliest. In the meantime, they’ll be making necessary preparations, such as hiring independent board members and spending on IT and accounting to make sure they’re ready.
“You have this dynamic of where expectations were in ’21 and the prices that were paid then,” Lichtenstein said in an interview. “We’re still dealing with a little bit of that hangover.”
—CNBC’s Jonathan Vanian contributed to this report
Ike Boruchow, Wells Fargo Securities senior analyst, joins ‘Squawk on the Street’ to discuss why Boruchow favors Nike over Lululemon, clues from the holiday shopping season that may have influenced Wells Fargo’s decision, and much more.
Check out the companies making headlines before the bell: Coinbase — Crypto-related assets surged after Bitcoin topped $40,000 for the first time this year. Coinbase jumped 7%, MicroStrategy gained 7% and Marathon Digital climbed 13%. Uber Technologies — The ride-hailing stock rose 4% after S & P Dow Jones Indices on Friday said it will enter the S & P 500, along with Jabil and Builders FirstSource . The three will replace Sealed Air , Alaska Air Group and SolarEdge Technologies . Shares of Jabil and Builders FirstSource were each higher by more than 2%. General Motors — Shares of the Cadillac and Chevrolet maker added 1.3% after an upgrade from Mizuho Securities, which said GM has bottomed and is poised for growth, particularly after the labor settlement with the United Auto Workers. Spotify Technology — Spotify rose more than 1% before the bell after the music streamer said it’s laying off 17% of its workforce as it looks to trim costs amid slower growth. The cuts total about 1,500 jobs, according to a CNBC source familiar with the matter. Spotify was 129% higher for the year as of Friday’s close. Alaska Air Group — The Seattle-based carrier slid 12% after agreeing to acquire Hawaiian Airlines for $1.9 billion. Alaska Air, which would pay $18 a share, would take on $900 million in debt as part of the deal. Hawaiian Holdings, Hawaiian Air’s parent, soared 182%. Alaska Air is also coming out of the S & P 500 index. Lululemon Athletica — Shares slipped 2.1% after Wells Fargo downgraded the athleisure company to equal weight from overweight. The bank said Lululemon’s positive catalysts have already played out, and forecasts more muted growth in 2024. Carvana — Shares jumped more than 5% after JPMorgan upgraded Carvana to neutral from underweight. The Wall Street firm said the online car retailer has bolstered productivity and made progress cutting costs. — CNBC’s Michelle Fox, Hakyung Kim, Pia Singh and Samantha Subin contributed reporting
U.S. Federal Reserve Board Chairman Jerome Powell participates in a panel discussion at the 24th Jacques Polak Annual Research Conference on November 8, 2023 in Washington, DC.
Alex Wong | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Fed Chair Powell says too ‘premature’ to cut rates Federal Reserve Chairman Jerome Powell said Friday it was too early to declare victory over inflation and beat back on market views for interest rate cuts next year. “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said in prepared remarks. Markets perceived his comments as dovish, sending stocks higher and Treasury yields sharply lower.
S&P 500 soars to 2023 high The S&P 500 rose 0.59% Friday and closed at a new high for 2023, extending a strong rally from November. The Nasdaq Composite ended 0.55% higher, while the Dow Jones Industrial Average added 0.82%. The benchmark index closed at its highest level since March 2022 as investors were hopeful that that the Fed might be done with raising interest rates. Europe’s Stoxx 600 closed 1% higher Friday after finishing its best month since January.
A $1.9 billion regional airlines deal Alaska Airlines has agreed to buy rival Hawaiian Airlinesin a $1.9 billion deal as the carriers make a push to expand along the West Coast. Alaska would pay $18 a share for Hawaiian and would take on $900 million of its debt, the companies said Sunday. The deal could also draw another potential regulatory battle in the second proposed airline merger in less than two years.
Uber gets a spot in the S&P 500 Uber will be added to the S&P 500 Index, replacing Sealed Air Corp. The change will take place prior to the open of trading on Dec. 18. The ride-hailing company made its delivery business profitable faster than expected, while growth in advertising revenue has also contributed to Uber’s profitability.
[PRO] China’s version of Spotify is ‘underappreciated,’ Morgan Stanley says
Tencent Music Entertainment “music value [is] still underappreciated,” Morgan Stanley says even as the company is convincing more people in China to pay for music. The company’s online music subscribers topped 100 million in the July-to-September period, for the first time since it listed in the U.S. in late 2018.
Wall Street is off to a solid start this December, with the major averages recording their fifth straight week of gains on Friday.
This comes on the back of November's spectacular rally which saw markets snapping a three-month losing streak, driven by bets that the Fed may just be done with raising rates and could even start cutting them as soon as the first half of next year.
There was, however, pushback from Fed Chair Jerome Powell, calling the talks of cuts "premature". But stock markets took heart from what traders perceived as a clearly dovish message from the central bank chief.
"There's a trifecta of drivers here. The first is the inflation. Second is the Fed seeming like it may be stepping to the sidelines, and the third is this cooling in the economy that is starting to unfold, but at a very gradual pace," said Mona Mahajan, senior investment strategist at Edward Jones.
"It's almost like a Goldilocks cooling. It's not too hot. It's not too cold. And that's exactly what markets are embracing."
Powell's remarks cemented views that the Fed is at least done raising rates. Powell also noted that inflation was "moving in the right direction."
Fed's meeting on Dec. 13 will help clear the air on its interest-rate plans.
Dara Khosrowshahi, CEO of Uber, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 18th, 2023.
Adam Galica | CNBC
Uber shares rose 5% in extended trading on Friday after the ride-hailing company was added to the S&P 500 Index, replacing Sealed Air Corp.
The change will take place prior to the open of trading on Monday, Dec. 18, according to a press release.
A company’s stock price often rises on news that it’s joining the S&P 500 because fund managers who track the benchmark, which gets updated each quarter, have to acquire the shares. Companies also have to meet certain valuation and profitability requirements.
Uber shares debuted on the New York Stock Exchange in 2019, but the company was burning cash as it had to pay drivers enough money to stay competitive in a low-margin business. Its preferred metric was adjusted earnings before interest, tax, depreciation and amortization, or EBITDA.
Most of Uber’s adjusted EBITDA comes from mobility, but the company made its delivery business profitable faster than planned, after recession-fearing investors became more averse to investing in money-losing companies. Growing advertising revenue has also contributed to Uber’s profitability.
Uber eliminated more than 3,500 jobs in 2020, and executives have since worked to improve its cost structure. For example, they reduced the cost of deliveries. Uber reported net income of $221 million on $9.29 billion in revenue in the third quarter, and in the past four quarters altogether, it generated over $1 billion in profit.
“Nelson [Chai, Uber’s outgoing finance chief] and my goal is to build a company that can compound top line rates at very, very attractive rates and continue to improve margins over a period of time,” Uber CEO Dara Khosrowshahi told UBS analyst Lloyd Walmsley at an investor meeting in December 2021. “You’ve seen those long-term compounders and margin increasers and, you know, the greats of the world, the Googles, the Facebooks, the Microsofts of the world, and we aspire for no less.”
According to S&P’s rules, members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total. Constituents of the index must have an adjusted market cap of at least $14.5 billion.
Uber has a market cap of about $118 billion, while the median market cap of companies in the S&P 500 is just over $31 billion.
Sam Altman, CEO of ChatGPT maker OpenAI, arrives for a bipartisan Artificial Intelligence (AI) Insight Forum for all U.S. senators hosted by Senate Majority Leader Chuck Schumer (D-NY) at the U.S. Capitol in Washington, U.S., September 13, 2023.
Leah Millis | Reuters
OpenAI’s unusual company structure weakened Sam Altman’s position as CEO and left him open to surprise on Friday when he was quickly ousted from the company.
It’s rare to see founders forced out of a firm they helped co-found. At Uber, for example, founder Travis Kalanick was forced out only after a series of reports on privacy issues and allegations of discrimination and sexual harassment at the ride-sharing company.
But Altman and co-founder Greg Brockman, who also left OpenAI Friday, didn’t have the power that Kalanick had.
“I have no equity in OpenAI,” Altman said in a May Senate hearing on A.I. Senator John Kennedy’s reaction offered some foreshadowing.
“You need a lawyer or an agent,” Kennedy said in a now-prescient joke.
The structure of the company helps explain how he was left in a vulnerable position that, as he said on Saturday, left him feeling “a little screwed.”
The easiest way to think of OpenAI’s structure is to picture a waterfall. The board of directors sits at the top. OpenAI Global, the capped-profit company in which Microsoft invested billions and of which Sam Altman had become the global face, sits at the bottom. There’s some stuff in the middle.
So let’s start at the very top of the waterfall. OpenAI’s board of directors – the ultimate decision body and the group responsible for pushing Altman out – controls OpenAI’s 501(c)(3) charity, OpenAI Inc. That charity is the nonprofit of which you may be aware. It was established to “ensure that safe artificial general intelligence is developed and benefits all of humanity.”
The company’s website says the nonprofit’s charter takes “precedence over any obligation to generate a profit.” In other words, the nonprofit is the priority, while the capped-profit Open AI Global subsidiary is not.
There’s a holding company and another LLC called OpenAI GP, which both give the board ownership or control over OpenAI Global. Again, that’s the company Microsoft invested in. It’s the one you hear about in the news when Altman talks about ChatGPT developments and whatnot. What’s important here is that OpenAI Global had no control. It was the one controlled or owned by all of the other entities in various ways.
So now you’re probably wondering — why have a for-profit company at the bottom of a corporate structure if everything’s just going to be run by a nonprofit? There’s a reason for that, too.
OpenAI added its capped profit OpenAI Global subsidiary in 2019. The shift was prompted by several things, including a desire to attract top employees and investors with “startup-like equity.”
Remember, if your ultimate goal is to ensure the safe use of AI, you’re going to want to bring on some really smart people. And that’s tough when every big company on the market is willing to pay them top dollar to work. So if you’re OpenAI, you need incentives.
Part of that shift to a for-profit model meant reassessing how OpenAI rewarded those employees and investors who gambled on the company. The company settled on a capped-profit approach. It limited the “multiple” that investors could make by sending cash OpenAI’s way.
At the time, the profit cap was set at 100x of a first-round backer’s investment. In plain language, if investors put in $1, even if OpenAI was making billions of dollars in profit, that investor would be limited to $100 in total direct profit. It would still be a sizeable return, but not unlimited.
But remember, the core mission of the nonprofit is to control the development of artificial general intelligence. And all investors and employees are subject to that mission above anything else, including the for-profit company.
OK, so we have a nonprofit with a business that makes profits in order to attract top talent. How does Altman fit in here and how’d he get ousted?
Altman had a board seat and was the best-known OpenAI personality. Aside from a small investment through a YCombinator fund (Altman was formerly its president), he doesn’t have any equity in the company. And that meant he didn’t have much control if anything turned against him.
He even joked about it Friday evening: “If I start going off, the OpenAI board should go after me for the full value of my shares.”
In fact, it reportedly worried some investors that Altman didn’t have ownership in the company he helped co-found, despite Altman’s public pronouncements that he was committed to OpenAI because he loved the work.
Most founders at later-stage companies take advantage of a dual-class share structure. Two tiers of shares are created — a set of shares for venture investors and the general public, if the company makes it to an IPO, and a more powerful set of shares reserved for founders or, in some cases, major investors.
CEOs and founders use dual-class share structures to protect themselves from losing control of their company. The rights assigned to these shareholders vary, but they often include outsize voting power, guaranteed board seats, or other governance provisions that make it hard for a board to topple them even if a company goes public. Some companies, like Google, even have three classes of shares, for its founders, employees, and investors.
Altman didn’t have those protections. Brockman, the former OpenAI president, said that Altman found out he was “being fired” in a virtual meeting Friday noon. Altman’s only heads up, Brockman said on X, the social media platform formerly known as Twitter, was a text from OpenAI chief scientist Ilya Sutskever a day before.
Investors like to back visionary founders. Some, like Peter Thiel’s Founders Fund, have centered their investment theses around the idea. Not having equity in the company could have been perceived as reducing Altman’s “skin in the game,” so to speak. But it also meant that Altman, lacking those protections, was open to a boardroom coup.
At Uber, five major investors demanded Kalanick’s departure immediately, including one of the company’s largest shareholders Benchmark, after months of negative reports on workplace culture and other controversies. OpenAI, by contrast, hasn’t seen a similar storyline emerge. Altman is a divisive figure, and many critics have worried about the impact OpenAI’s ultimate goal — artificial general intelligence, or AGI — would have for humanity.
OpenAI’s small board lacks the experience that would be expected from a company of its size and importance. None of its largest backers, not even Microsoft, have board seats. Until Altman and Brockman’s departure, it was composed of three outside directors and three OpenAI executives.
Brockman wasn’t involved in Altman’s firing, meaning that every outside director and Sutskever would have had to all vote to fire Altman. With no allies on the six-person board, it was a mathematical impossibility that Altman could win.
It isn’t clear what comes next for Altman or OpenAI. Litigation is possible, given the apparently swift nature of his departure. Some of Silicon Valley’s most influential law firms have represented OpenAI or its investors in various deals, and any courthouse proceedings will likely be closely watched.
People walk by the New York Stock Exchange (NYSE) on November 02, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
A fierce winning streak U.S. stocks rose Tuesday to hit fresh winning streaks, their longest in three years. But Asia-Pacific markets were mixed Wednesday. Japan’s Nikkei 225 ticked down 0.1% despite rising confidence among large Japanese manufacturers, according to a Reuters Tankan survey. Meanwhile, Australia’s S&P/ASX 200 climbed 0.2% a day after the country’s central bank raised rates by 25 basis points.
Microsoft closes at a high Microsoft shares climbed 1.12% to hit $360.53, a record high. It’s the eighth consecutive day in which the technology giant’s shares rose, a streak unseen since January 2021. Investors cheered Microsoft CEO Satya Nadella’s surprise appearance at OpenAI’s event, where he encouraged developers to build with Microsoft’s Azure cloud infrastructure.
‘Absolutely booming’ Chinese sector China’s economy hasn’t recovered from its pandemic blues. But in the sectors of “electric vehicles and everything around sustainability and renewable power technology,” China is “absolutely booming,” Standard Chartered CEO Bill Winters told CNBC. Relatedly, China’s truck industry is increasingly using vehicles with assisted-driving technology, a critical step toward monetizing the nascent business.
Peak, not pause? The U.S. Federal Reserve, European Central Bank and the Bank of England all paused interest rate hikes in recent weeks. This breather comes after dramatic hikes over the last 18 months as central banks grappled with unruly inflation. Some market watchers, in fact, think this lull in hikes isn’t so much a pause but the peak in rates — and are turning their attention to when central banks will start cutting.
[PRO] Buy BYD Over the past 18 months, Warren Buffett’s Berkshire Hathaway has sold more than half its stake in Chinese electric vehicle maker BYD, according to stock filings. Despite that, analysts still think BYD’s a stock worth buying — and some even raised their price targets for the firm.
Last month’s sudden surge in Treasury yields and oil prices — both of which tend to suppress investors’ appetite for stocks — looks to be ending. No, scratch that — the increases aren’t just ending, they’re ebbing.
Look at oil: Contracts for both West Texas Intermediate and Brent futures fell around $3. WTI’s now at $77.01 a barrel while Brent’s $81.44, their lowest since July. That’s almost $10 per barrel less compared with a month ago, when prices jumped on fears triggered by the Israel-Hamas conflict.
Meanwhile, the 10-year Treasury yield fell around 10 basis points to 4.569% and the 2-year yield slipped 3 basis points to 4.915%. As Treasury yields serve as the benchmark for interest rates on loans and cash investments, sinking yields generally benefit rate-sensitive companies more. In other words: the Magnificent Seven Big Tech. Amazon led the pack, shooting up 2.13% yesterday.
That explains why the Nasdaq Composite jumped 0.9%, more than the S&P 500’s 0.28% gain and the Dow Jones Industrial Average’s 0.17% increase. Still, that’s not downplaying the movements. The S&P and Dow are enjoying their seventh consecutive session of gains, while the Nasdaq’s basking in its eighth.
If the U.S. Federal Reserve does indeed steer the economy to a soft landing, in which inflation is contained below 2% without the economy contracting, then there could be a further rally in stocks, said HSBC. Within periods of soft landings, the S&P has jumped, on average, 22% in the space between a pause and six months after rate cuts begin, noted HSBC’s global equity strategist Alastair Pinder.
And that immaculate disinflation isn’t just a dream. Chicago Federal Reserve President Austan Goolsbee told CNBC, “Because of some of the strangeness of this moment, there is the possibility of the golden path … that we got inflation down without a recession.”
Both the economy and markets have truly acted in strange, unprecedented ways ever since the pandemic. From one of the worst years for stocks and bonds in 2022, to a widely heralded bull rally in the S&P — and then a correction — in 2023. And I haven’t even started on the U.S. labor market and inflation numbers. Strange may be new and unsettling, but it isn’t necessarily bad.
Woman rides a Bird e-scooter in southern California.
Bird, a provider of electric scooters that consumers can rent in cities, said the New York Stock Exchange will suspend trading of its stock after the company failed to keep its market capitalization above $15 million for 30 consecutive days.
The company’s shares will trade on the over-the-counter exchange starting Monday, according to a statement.
Electric scooter and bike rentals became a trendy alternative to public transit and ride sharing prior to the pandemic, when venture capitalists were pumping money into all sorts of growth areas regardless of how unprofitable they were. Bird raised over $500 million, and was valued at $2.5 billion in a 2019 round led by Sequoia Capital.
The onset of Covid in 2020 brought the business almost to a halt as cities went into lockdown. Growth resumed in 2021, but the bubble days were over.
That year Bird went public through a merger with a special purpose acquisition company, but the economics continued to deteriorate. Its net loss swelled to $359 million in 2022 from $215 million a year earlier. Revenue in that span increased 28% to $245 million.
The stock lost 80% of its value this year, closing on Friday at 90 cents and giving it a market cap of $11.6 million. That’s after a 1-for-25 reverse stock split meant to get the stock trading back above $1.
In June, Travis VanderZanden, a former Lyft and Uber executive who founded Bird in 2017 and was once described as “the electric-scooter king,” left the company.
“We firmly believe that BRDS current market cap does not reflect the intrinsic value of the Company,” Michael Washinushi, Bird’s interim CEO, was quoted as saying in the statement on Friday. “And while disappointing, this change in our listing status on the NYSE does not alter our commitment to our shareholders, our valued employees across Bird and Spin, our partners and the many global cities and institutions with which we work.”
Fidji Simo, chief executive officer of Instacart Inc., speaks during a Bloomberg Studio 1.0 interview in San Francisco, California, U.S., on Thursday, March 3, 2022.
David Paul Morris | Bloomberg | Getty Images
Instacart, the grocery delivery company that saw its business boom during the pandemic, priced its long-awaited IPO at $30 a share on Monday, and will become the first notable venture-backed tech company to hit the U.S. public market since December 2021.
The offering came in at the top end of the expected range of $28 to $30 a share, and values Instacart at about $10 billion on a fully diluted basis.There were 22 million shares sold in the IPO, with 14.1 million coming from the company and 7.9 million from existing shareholders. The stock is set to debut on the Nasdaq on Tuesday under ticker symbol “CART.”
The 11-year-old company, which delivers groceries from chains including Kroger, Costco and Wegmans, had to drop its stock price dramatically to make it appealing for public market investors. In early 2021, at the height of the Covid pandemic, Instacart raised money at a $39 billion valuation, or $125 a share, from prominent venture firms like Sequoia Capital and Andreessen Horowitz, along with big asset managers Fidelity and T. Rowe Price.
The tech IPO market has been largely shuttered since December 2021, as inflationary pressures and rising interest rates pushed investors out of risk and led to a plunge in the prices of internet and software stocks. Instacart’s performance, along with the upcoming debut of cloud software vendor Klaviyo, could help determine if other billion-dollar-plus companies in the pipeline are willing to test the waters.
Instacart has sacrificed growth for profitability, proving in the process that its business model can generate earnings. Revenue increased 15% in the second quarter to $716 million, down from growth of 40% in the year-earlier period and about 600% in the early months of the pandemic. The company reduced headcount in mid-2022 and lowered costs associated with customer and shopper support.
Instacart started generating earnings in the second quarter of 2022, and in the latest quarter reported $114 million in net income, up from $8 million a year prior.
At $10 billion, Instacart will be valued at about 3.5 times annual revenue. Food delivery provider DoorDash, which Instacart names as a competitor in its prospectus, trades at 4.25 times revenue. DoorDash’s revenue in the latest quarter grew faster, at 33%, but the company is still losing money. Uber’s stock trades for less than 3 times revenue. The ridesharing company’s Uber Eats business is also named as an Instacart competitor.
The bulk of Instacart’s competition is coming from Amazon as well as big brick-and-mortar retailers, like Target and Walmart, which have their own delivery services. Target acquired Shipt in 2017 for $550 million.
Sequoia is Instacart’s biggest investor, with a fully-diluted stake of 15%. While the Silicon Valley firm is sitting on a paper profit of over $1 billion on its total investment, the $50 million in shares it purchased in 2021 are now worth about one-quarter that amount.
Instacart co-founder Apoorva Mehta owns shares worth over $800 million, and is selling a small portion of them in the IPO. Mehta has been executive chairman since the company appointed ex-Facebook executive Fidji Simo as his successor as CEO in 2021. Mehta is resigning from the board in conjunction with the IPO, and Simo is assuming the role of chair.
Only about 8% of Instacart’s outstanding shares were floated in the offering, with 36% of those sold coming from existing shareholders. The company said co-founders Brandon Leonardo and Maxwell Mullen are each selling 1.5 million, while Mehta is selling 700,000. Former employees, including those who were in executive roles as well as in product and engineering, are selling a combined 3.2 milion.
A screenshot of Project Sunroof shows the map data offered by the pilot project, which is meant to help consumers plan solar installations for their homes.
Screenshot
Google is planning to license new sets of mapping data to a range of companies to use as they build products around renewable energy, and is hoping generate up to $100 million in its first year, CNBC has learned.
The company plans to sell access to new APIs (application programming interfaces) with solar and energy information and air quality, according to materials viewed by CNBC.
Among the new offerings will be a Solar API, which could be used by solar installers like SunRun and Tesla Energy and solar design companies like Aurora Solar, according to a list of example customers viewed by CNBC. Google also sees customer opportunities with real estate companies like Zillow, Redfin, hospitality companies like Marriott Bonvoy, and utilities like PG&E.
Some of the data from the Solar API will come from a consumer-focused pilot called Project Sunroof, a solar savings calculator that originally launched in 2015. The program allows users to enter their address and to receive estimated solar costs such as electric bill savings and the size of the solar installation they’ll need. It also offers 3D modeling of the roofs of buildings and nearby trees based on Google Maps data.
Google plans to sell API access to individual building data, as well as aggregated data for all buildings in a particular city or county, one document states. The company says it has data for over 350 million buildings, according to documents, up significantly from the 60 million buildings it cited for Project Sunroof in 2017.
One internal document estimates the company’s solar APIs will generate revenue between $90 and $100 million in the first year after launch. There’s also a potential to connect with Google Cloud products down the line, documents state.
As part of the planned launch, the company is also planning to announce an Air Quality API that will let customers request air quality data, such as pollutants and health-based recommendations for specific locations. It’ll also include digital heat maps of the data and hourly air quality information, as well as air quality history of up to 30 days.
Google did not immediately respond to a request for comment.
The latest revenue play comes as the company has been trying to monetize its maps products as it faces pressure to produce revenue amid a broader economic slowdown. While the company is focusing on becoming more efficient, it’s also been investing in newer technologies like generative AI and sustainability — a market it hopes to take advantage of with the Solar API.
The company currently licenses its mapping API for navigation to companies like Uber, which said in 2019 it paid Google $58 million over there years. Maps API revenue goes toward the company’s cloud segment, which finally turned profitable in the first quarter but has had a rocky path toward trying to compete with market leaders Amazon and Microsoft.
Google doesn’t break out how much its Maps business makes, but it has historically been one of Google’s most under-monetized products, Morgan Stanley analyst Brian Nowak told CNBC in 2021. At the time, Morgan Stanley had estimated Google Maps would earn $11.1 billion by this year as new travel products and promoted pins began to increase ad revenue.
The move also comes as the company attempts to streamline its mapping products. In June, CNBC found the company was laying off employees at traffic-reporting app Waze, which it acquired in 2013, and combining it with the Google Maps team.
Instacart, the grocery delivery company that slashed its valuation during last year’s market slide, filed its paperwork to go public on Friday in what’s poised to be the first significant venture-backed tech IPO since December 2021.
The stock will be listed on the Nasdaq under the ticker symbol “CART.” In its prospectus, the company said net income totaled $114 million, while revenue in the latest quarter hit $716 million, a 15% increase from the year-ago period. Instacart has now been profitable for five straight quarters, according to the filing. PepsiCo has agreed to purchase $175 million of the company’s stock in a private placement.
Instacart said it will continue to focus on incorporating artificial intelligence and machine learning features into the platform, and that the company expects to “rely on AIML solutions to help drive future growth in our business.” In May, Instacart said it was leaning into the generative AI boom with Ask Instacart, a search tool that aims to answer customers’ grocery shopping questions.
“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. “Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”
Instacart will try and crack open the IPO market, which has been mostly closed since late 2021. In December of that year, software vendor HashiCorp and Samsara, which develops cloud technology for industrial companies, went public, but there haven’t been any notable venture-backed tech IPOs since. Chip designer Arm, which is owned by Japan’s SoftBank, filed for a Nasdaq listing on Monday.
Founded in 2012 and initially incorporated as Maplebear Inc., Instacart will join a crop of so-called gig economy companies on the public market, following the debut in 2020 of Airbnb and DoorDash and car-sharing companies Uber and Lyft a year earlier. They’ve not been a great bet for investors, as only Airbnb is currently trading above its IPO price.
Instacart shoppers and drivers deliver goods in over 5,500 cities from more than 40,000 grocers and other stores, according to its website. The business took off during the covid pandemic as consumers avoided public places. But profitability has always been a major challenge, as it is across much of the gig economy, because of high costs associated with paying all those contractors.
Headcount peaked in the second quarter of 2022, Instacart said, “and declined over the next two quarters, reducing our fixed operating cost base.” At the end of June, the company had 3,486 full-time employees.
In March of last year, Instacart slashed its valuation to $24 billion from $39 billion as public stocks sank. The valuation reportedly fell by another 50% by late 2022. Instacart listed Amazon, Target, Walmart and DoorDash among its competitors.
The biggest area for cost reductions has been in general and administrative expenses. Those costs shrank to $51 million in the latest quarter from $77 million a year earlier and a peak of $102 million in the final period of 2021. Instacart said the drop was the “result of lower fees related to legal matters and settlements.”
Simo took over as Instacart’s CEO in August 2021 and became chair of the company’s board in July 2022. She was previously head of Facebook’s app at Meta and reported directly to CEO Mark Zuckerberg. Apoorva Mehta, Instacart’s founder and executive chairman, plans to transition off the board after the company’s public market debut, according to a 2022 release.
The company’s board also includes Peloton CEO Barry McCarthy, Snowflake CEO Frank Slootman and Andreessen Horowitz’s Jeff Jordan.
Instacart will be one of the first independent grocery delivery companies to go public. Amazon Fresh, Walmart Grocery and Google Express are all units of large corporations. Shipt was acquired by Target in 2017 and Fresh Direct, another direct-to-consumer grocery delivery company, was bought by global food retailer Ahold Delhaize in 2021.
Sequoia Capital and D1 Capital Partners are the only shareholders owning at least 5% of the stock. Instacart said those two firms, along with Norges Bank Investment Management and entities affiliated with TCV and Valiant Capital Management, have “indicated an interest, severally and not jointly” in purchasing up to $400 million of shares in the IPO at the offering price.
Instacart’s move into AI has come largely through a string of acquisitions in the past two years. Those deals include the purchase of e-commerce startup Rosie, AI-powered pricing firm Eversight, AI shopping cart and checkout solutions provider Caper, and FoodStorm, a software startup specializing in self-serve kiosks for in-store customers.
The company also touted its use of machine learning in predicting grocery availability for retailers and increasing consumer sales. It said its algorithms predict availability every two hours for the “large majority” of its 1.4 billion grocery items, and that more than 70% of customers purchased items through Instacart’s recommendation algorithm in the second quarter of 2023.
Goldman Sachs is leading the offering. That’s the former employer of Instacart finance chief Nick Giovanni, who was previously global head of the tech, media and telecom group at the investment bank.
Amazon workers hold signs during a walkout event at the company’s headquarters on May 31, 2023 in Seattle, Washington.
David Ryder | Getty Images News | Getty Images
As part of Amazon’s aggressive effort to get employees back to the office, the company is going a step further and demanding that some staffers move to a central hub to be with their team. Those who are unwilling or unable to comply are being forced to find work elsewhere, and some are choosing to quit, CNBC has learned.
Several employees spoke to CNBC about the new relocation requirement. An employee in Texas, who was hired in a remote role, said managers assured his team in March that nothing would change despite the return-to-office (RTO) mandate issued the prior month. But in July, the team was informed by management that they’d have to choose between working out of Seattle, New York, Austin, Texas, or Arlington, Virginia, according to internal correspondence.
Under the guidelines, remote workers are expected to have completed their move to a main hub by the first half of 2024, the document states. The employee, who doesn’t live near any of the designated cities, chose to leave Amazon after securing another position, in part due to uncertainty about future job security and the potential of higher living costs associated with the relocation with no guarantee of an increase in salary.
The person asked not to be named to avoid retaliation. CNBC spoke with three other employees in similar situations who all asked to remain anonymous.
Amazon spokesperson Rob Munoz confirmed the relocation policy, and said it affects a small percentage of the company’s workforce. The e-commerce giant said hub locations vary by team, and each team determines which locations are their hub. The company does provide relocation benefits to employees asked to move.
“It’s not a one-size-fits-all approach, so we decided that the best thing to do was to communicate directly with teams and individuals who are affected to ensure they’re getting accurate information that’s relevant to them,” Munoz said in a statement. “If an individual feels like they don’t have the information they need, we encourage them to talk with their HR business partner or their manager.”
The relocation requirement is escalating tensions between Amazon and some of its roughly 350,000 corporate employees over RTO plans after many employees moved away from their in-person office location during the Covid pandemic.
In May, Amazon began requiring that staffers work out of physical offices at least three days a week, shifting from a policy that left it up to individual managers to decide how often team members should be in the office. CEO Andy Jassy has extolled the benefits of in-person work, saying it leads to a stronger company culture and collaboration between employees.
Following the mandate, a group of employees walked out in protest at the company’s Seattle headquarters. Staffers also criticized how Amazon handled the decision to lay off 27,000 people as part of job cuts that began last year.
The company is slashing costs elsewhere as well. Amazon said it will end a perk next year that allows staffers to get one free drink at in-office coffee shops. The company also reduced the amount it reimburses for parking, and stopped providing free Uber rides to and from work, employees said.
Amazon said it still reimburses employees’ public transportation costs in all major metro areas, and provides free commuter shuttles and campus shuttles.
The return-to-office mandate has been a particularly thorny subject, and enforcement has been a challenge. Amazon sent out a notification earlier this month to some staffers informing them that they weren’t “meeting our expectation of joining your colleagues in the office at least three days a week,” according to a copy of the memo viewed by CNBC. “We expect you to start coming into the office three or more days a week now.”
Some staffers who received that notice had been in compliance with the mandate, while others had taken vacation or sick leave that was approved by their manager, one staffer said. Employees expressed their frustration over the notice in comments on an internal support ticket, said the person, who asked to remain anonymous because he wasn’t authorized to speak on the matter.
Amazon responded to the ticket, explaining internally the notice was sent to employees who it determined had badged in fewer than three days a week for at least five of the past eight weeks or at least three of the past four weeks.
“If you believe that you received this email in error, please reach out to your manager to discuss your situation and ensure it is accurately reflected in the system,” the company said on the support site.
Amazon confirmed the authenticity of the internal correspondence. The company stressed it had called employees back to the office three days a week because it felt it would be beneficial for company culture.
“We knew that there would be some adjustment period, so we’ve worked to support people as they’ve figured out their routines,” Munoz said in a statement. “With three months under our belt, and a lot more people back in the office, we’re reiterating our expectation that people join their teammates at least three days in the office.”
Andy Jassy, chief executive officer of Amazon.Com Inc., during the GeekWire Summit in Seattle, Washington, U.S., on Tuesday, Oct. 5, 2021.
David Ryder | Bloomberg | Getty Images
For employees affected by the relocation policy, Amazon is asking that they move to a designated hub, which could be Seattle, Arlington, New York, Chicago, San Francisco or another main office. Some employees see it as a stark reversal from the company’s approach during the pandemic, when Amazon ramped up its recruiting outside of Seattle and Silicon Valley, and pledged to expand its presence in markets like Phoenix, Dallas and San Diego.
The employees who spoke to CNBC said they view the relocation requirement as onerous and significantly disruptive to their personal lives. In some cases, staffers are being asked to move out of state, which would require them to break their housing lease, or transition their children to new schools.
Amazon has informed the employees individually about the change, but the company hasn’t put out any official communication to the broader workforce. In late July, managers began informing employees that they’d soon be expected to work from a main hub location, and they could choose between relocating, finding another job internally or resigning. Some were told they had 30 to 60 days to make a decision, the staffers said.
Three employees based in different locations — Colorado, Utah and California — were each asked to relocate to Seattle. They told CNBC they’ve chosen to leave Amazon because moving would burden them financially or put too much strain on their family.
The employees said the relocation requirement made little sense to them, noting they already live within walking or commuting distance of an Amazon office where they’ve been working the mandated three days a week.
The prospect of transferring to a new role within the company isn’t seen as much of an option. Amazon paused corporate hiring last November as part of wider cost-cutting efforts, which translates into fewer job openings than normal. The staffers told CNBC they weren’t able to find much, if anything, in their current office that’s relevant to their expertise.
Still, it’s a difficult decision to quit, as companies, particularly in the tech industry, have been reducing headcount over the past year to reckon with rising inflation and economic uncertainty.
The crackdown at Amazon is leading to some bending of the rules. In a story last week about some of the RTO changes, Insider reported that some employees have considered using a family member’s address near an Amazon office, or agreed to relocate and then used the time they were given to move to look for another job.
The Colorado-based employee who was asked to move said that, adding it all up, the relocation requirement and Amazon’s broader effort to get people into the office make it feel as if leadership is “trying to make it less enjoyable to work there.”
Uber CEO Dara Khosrowshahi addresses the audience during the keynote at the start an Uber products launch in San Francisco, California on September 26, 2019.
Philip Pacheco | Afp | Getty Images
Shares of Uber fell 4% Tuesday after the company reported second-quarter results that missed analysts’ expectations for revenue but offered rosy guidance.
Here’s how the company did:
Earnings per share: 18 cents vs. 1 cent loss expected by analysts, according to Refinitiv.
Revenue: $9.23 billion vs. $9.33 billion expected by analysts, according to Refinitiv.
Revenue for the quarter was up 14% from the same quarter last year.
Uber reported a net income of $394 million, or 18 cents per share, compared to a net loss of $2.6 billion, or $1.33 per share, in the same quarter last year. That includes a $386 million net benefit from revaluations of Uber’s equity investments.
In a prepared statement, CEO Dara Khosrowshahi said the company achieved two major milestones during the quarter: its first quarter of free cash flow over $1 billion and its first GAAP operating profit. He added that the company plans to be profitable every quarter going forward in an interview with CNBC’s “Squawk Box” Tuesday.
“Both of these milestones were achieved through a combination of disciplined execution, record audience and strong engagement,” Khosrowshahi said in the statement.
Khosrowshahi said during the quarterly call with investors Tuesday that CFO Nelson Chai will depart the company in January 2024. Chai has served as Uber’s CFO since 2018, and he helped the company go public in 2019. The company said it has launched a search for his successor.
Uber reported adjusted EBITDA of $916 million, up 152% year over year. Gross bookings for the quarter came in at $33.6 billion, up 16% year over year.
For the third quarter of 2023, Uber said it expects to report gross bookings between $34 billion to $35 billion and an adjusted EBITDA of $975 million to $1.025 billion, both ahead of analysts’ expectations, according to StreetAccount.
Here’s how Uber’s largest business segments performed:
Mobility (gross bookings): $16.73 billion, up 25% year-over-year
Delivery (gross bookings): $15.60 billion, up 12% year-over-year
Uber’s mobility segment reported $4.89 billion in revenue, compared with delivery’s $3.06 billion. Its freight business booked $1.28 billion in sales for the quarter, down from the $1.83 billion it reported for the same quarter last year.
Khosrowshahi told CNBC freight has remained a challenging spot for Uber since consumers are spending more on services than on shipping goods. He said services spend ultimately benefits the company’s mobility and delivery businesses, but that Uber is adjusting costs for freight.
The number of Uber’s monthly active platform consumers reached 137 million in the second quarter, up 12% year over year. There were 2.3 billion trips completed on the platform during the period, up 22% year over year.
Car-sharing service Turo filed its IPO prospectus in January 2022. A month earlier, Reddit said it submitted a draft registration for a public offering. Instacart’s confidential paperwork was filed in May of last year.
None of them have hit the market yet.
Despite a bloated pipeline of companies waiting to go public and a rebound in tech stocks that pushed the Nasdaq up 30% in the first half of 2023, the IPO drought continues. There hasn’t been a notable venture-backed tech initial public offering in the U.S. since December 2021, when software vendor HashiCorp debuted on the Nasdaq.
Across all industries, only 10 companies raised $100 million or more in U.S. initial share sales in the first six months of the year, according to FactSet. During the same stretch in 2021, there were 517 such transactions, highlighted by billion-dollar-plus IPOs from companies including dating site Bumble, online lender Affirm, and software developers UiPath and SentinelOne.
As the second half of 2023 gets underway, investors and bankers aren’t expecting much champagne popping for the rest of the year.
Many once high-flying companies are still hanging onto their old valuations, failing to reconcile with a new reality after a brutal 2022. Additionally, muted economic growth has led businesses and consumers to cut costs and delay software purchases, which is making it particularly difficult for companies to comfortably forecast the next couple of quarters. Wall Street likes predictability.
So if you’re waiting on a splashy debut from design software maker Canva, ticket site StubHub or data management company Databricks, be patient.
“There’s a disconnect between valuations in 2021 and valuations today, and that’s a hard pill to swallow,” said Lise Buyer, founder of IPO consultancy Class V Group in Portola Valley, California. “There will be incremental activity after a period of absolute radio silence but it isn’t like companies are racing to get out the door.”
The public markets tell an uneven story. This year’s rally has brought the Nasdaq to within 15% of its record from late 2021, while an index of cloud stocks is still off by roughly 50%.
Some signs of optimism popped up this month as Mediterranean restaurant chain Cava went public on the New York Stock Exchange. The stock more than doubled on its first day of trading, indicating high demand from retail investors. Buyer noted that institutions were also enthused about the deal.
Last Friday, Israeli beauty and tech company Oddity, which runs the Il Makiage and Spoiled Child brands, filed to go public on the Nasdaq.
That all comes after a big month for secondary offerings. According to data from Goldman Sachs, May was the busiest month for public stock sales since November 2021, driven by a jump in follow-on deals.
While investors are craving new names, they’re much more discerning when it comes to technology than they were at the tail end of the decade-long bull market.
Mega-cap stocks Apple and Nvidia have seen outsized gains this year and are back to trading near all-time highs, boosting the Nasdaq because of their hefty weightings in the index. But the advances are not evenly spread across the industry.
In particular, investors who bet on less mature businesses are still hurting. The companies that held the seven-biggest tech IPOs in the U.S. in 2021 have lost at least 40% of their value since their debut. Coinbase, which went public through a direct listing, is down more than 80%.
That year’s IPO class featured high-growth businesses with even higher cash burn, an equation that worked fine until recession concerns and rising interest rates pushed investors into assets better positioned to withstand an economic slowdown and increased capital costs.
Employees of Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, watch as their listing is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, April 14, 2021.
Shannon Stapleton | Reuters
Bankers and investors tell CNBC that optimism is picking up, but ongoing economic concerns and the valuation overhang from the pre-2022 era set the stage for a quiet second half for tech IPOs.
One added challenge is that fixed income alternatives are back. Following a lengthy stretch of near-zero interest rates, the Federal Reserve this year lifted its target rate to between 5% and 5.25%. Parking money in short-term Treasurys, certificates of deposit and high-yield savings offerings can now generate annual returns of 5% or more.
“Interest rates are not only about the cost of financing, but also getting investors to trade out of 5% risk-free returns,” said Jake Dollarhide, CEO of Longbow Asset Management. “You can make 15%-20% in the stock market but lose 15%-20%.”
Dollarhide, whose firm has invested in milestone tech offerings like Google and Facebook, says IPOs are important. They offer more opportunities for money managers, and they generate profits for the tech ecosystem that help fund the next generation of innovative companies.
But he understands why there’s skepticism about the window reopening. Perhaps the biggest recent bust in tech investing followed the boom in special purpose acquisition companies (SPACs), which brought scores of less mature companies to the public market through reverse mergers.
“It seems the foul odor of failure from the 2021 SPAC craze has spoiled the appetite from investors seeking IPOs,” Dollarhide said. “I think that’s done some harm to the traditional IPO market.”
Private markets have felt the impact. Venture funding slowed dramatically last year from record levels and has stayed relatively suppressed, outside of the red-hot area of artificial intelligence. Companies have been forced to cut staff and close offices in order to preserve cash and right-size their business
Pre-IPO companies like Stripe, Canva and Klarna have taken huge hits to their valuations, either through internal measures or markdowns from outside investors.
Few have been hit as hard as Instacart, which has repeatedly slashed its valuation, from a peak of $39 billion to as low as $10 billion in late 2022. Last year, the company confidentially registered for an IPO, but still hasn’t filed publicly and doesn’t have immediate plans to do so.
Similarly, Reddit said in December 2021 that it had confidentially submitted a draft registration statement to go public. That was before the online ad market took a dive, with Facebook suffering through three straight quarters of declining revenue and Google’s ad sales also slipping.
Now Reddit is in the midst of a business model shift, moving its focus beyond ads and toward generating revenue from third-party developers for the use of its data. But that change sparked a protest this month across a wide swath of Reddit’s most popular communities, leaving the company with plenty to sort through before it can sell itself to the public.
A Reddit spokesperson declined to comment.
Turo was so close to an IPO that it went beyond a confidential filing and published its full S-1 registration statement in January 2022. When stocks sold off, the offering was indefinitely delayed. To avoid withdrawing its filing, the company has to continue updating its quarterly results.
Like Instacart, Turo operates in the sharing economy, a dark spot for investors last year. Airbnb, Uber and DoorDash have all bounced back in 2023, but they’ve also instituted significant job cuts. Turo has gone in the opposite direction, more than doubling its full-time head count to 868 at the end of March from 429 at the time of its original IPO filing in 2021, according to its latest filing. The company reportedly laid off about 30% of its staff in 2020, during the Covid pandemic.
Turo and Instacart could still go public by year-end if market conditions continue to improve, according to sources familiar with the companies who asked not to be named because they weren’t authorized to speak publicly on the matter.
Byron Deeter, a cloud software investor at Bessemer Venture Partners, doesn’t expect any notable activity this year, and says the next crop of companies to debut will most likely wait until after showing their first-quarter results in 2024.
“The companies that were on file or were considering going out a little over a year ago, they’ve pulled, stopped updating, and overwhelmingly have no plans to refile this calendar year,” said Deeter, whose investments include Twilio and HashiCorp. “We’re 10 months from the real activity picking up,” Deeter said, adding that uncertainty around next year’s presidential election could lead to further delays.
In the absence of IPOs, startups have to consider the fate of their employees, many of whom have a large amount of their net worth tied up in their company’s equity, and have been waiting years for a chance to sell some of it.
Stripe addressed the issue in March, announcing that investors would buy $6.5 billion worth of employee shares. The move lowered the payment company’s valuation to about $50 billion from a high of $95 billion. Deeter said many late-stage companies are looking at similar transactions, which typically involve allowing employees to sell around 20% of their vested stock.
He said his inbox fills up daily with brokers trying to “schlep little blocks of shares” from employees at late-stage startups.
“The Stripe problem is real and the general liquidity problem is real,” Deeter said. “Employees are agitating for some path to liquidity. With the public market still pretty closed, they’re asking for alternatives.”
G Squared is one of the venture firms active in buying up employee equity. Larry Aschebrook, the firm’s founder, said about 60% of G Squared’s capital goes to secondary purchases, helping companies provide some level of liquidity to staffers.
Aschebrook said in an interview that transactions started to pick up in the second quarter of last year and continued to increase to the point where “now it’s overwhelming.” Companies and their employees have gotten more realistic about the market reset, so significant chunks of equity can now be purchased for 50% to 70% below valuations from 2021 financing rounds, he said.
Because of nondisclosure agreements, Aschebrook said he couldn’t name any private company shares he’s purchased of late, but he said his firm previously bought pre-IPO secondary stock in Pinterest, Coursera, Spotify and Airbnb.
“Right now there’s a significant need for that release of pressure,” Aschebrook said. “We’re assisting companies with elongating their private lifecycle and solving problems presented by staying private longer.”
